An Introduction to Contract Defenses

• Author: Franklin G. Snyder, Mark Edwin Burge
• Pages: 236-237

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236 CHAPTER V: CONTRACT DEFENSES

An Introduction to

CONTRACT DEFENSES

Where Are We Now? At this point, you have marched through the book far

enough to understand the concepts of formation and consideration. Pretend now that

a contract problem walks into your law office. You plainly find an exchange of

consideration. You plainly have an offer and an acceptance by the appropriate parties.

Under the section we called “Formation,” has a contract been formed? At this point

you might be tempted to think that the answer is yes, but you probably are familiar

enough with the way law school works that the answer is likely to be “maybe.” At this

point, we fairly can say there is a presumption that a contract has been formed, but

that the presumption can be rebutted.

Assume, for example, that A and B—anonymous parties for the moment—sign

a written agreement under which A agrees to sell B her car for $5,000. We have a

signed agreement, so basic formation issues are not a problem. Also, both cash and

automobiles are things of value that can act as consideration. To decide if a contract

actually was formed, nonetheless, we may have to answer some other questions.

Would it matter, for example, if A was unwilling and B held a gun to her head to

make her sign the agreement? Would it matter that B was only six years old? Or that

A purportedly sold the car while knowing that it had actually been destroyed by a

meteor earlier that morning and was a smoking hunk of melted metal at the time of

the sale?

Enter the Defenses. Your intuition may be that courts would not enforce

agreements in the above situations. But what are the reasons why not? As a matter

of policy, we do not want contract law to reward liars and thugs or to allow children

potentially to be exploited. For reasons such as these, contract law includes the

concept of defenses to formation. If a valid defense exists, no enforceable agreement

exists even though the rules of formation and consideration suggest otherwise. In

earlier times, lawyers generally would call these situations “unenforceable contracts.”

Today, since the definition of contract includes enforceability, an unenforceable

contract is a bit of an oxymoron, so some prefer to say that there is no contract at all.

The terminology may vary, but the effect, no matter what we call it, is that the party

claiming breach cannot recover.

Shifting Burdens of Proof. In contract litigation, the burden of the party

claiming the breach (usually the plaintiff) is to prove the existence of an agreement

and of consideration, where such matters are disputed issues. At that point, the

burden shifts to the alleged breaching party to raise any of the various defenses to

formation. That party will bear the burden of proof on that issue. The plaintiff does

not have to prove he did not brandish a gun; the defendant must prove he did. For

those litigating contract disputes, the burden of proof can be significant.